Invest capital in CGA scheme

QLong- term capital gains ( LTCG) can be deposited in specified banks apart from bonds in certain notified institutions to save income- tax under Section 54EC. I am aware of the bonds issued by Rural Electrification Corporation ( REC) and National Highways Authority of India ( NHAI). Can you please tell me which other institutions or banks issue such bonds? JANARDHAN Via mail

( A) The tax on LTCG can be saved by investing in capital gain bonds of NHAI or REC specified under Section 54EC of the Income- Tax Act within six months from the date of sale of the asset or by investing the sale proceeds or LTCG in a residential house. In case the amount is not invested before the due date of furnishing the return of income, the unutilised amount needs to be deposited in a specified bank or institution under “Capital Gains Account Scheme”, which may be withdrawn later for the purpose of purchase or construction of the residential house within the specified time.

The investment in the capital gain scheme mentioned above can only be utilised for the construction/ purchase of residential house within the time specified under the Income- Tax Act, 1961. Whether you will be eligible to claim the benefit will also depend on various factors like which capital asset is being sold.

In case the long term capital gains on sale pertains to sale of residential house and the intent is to invest the same in a residential property, the amount of long term capital gain on sale of residential property to the extent of unutilised amount can be invested in the above scheme till the due date of furnishing the return of income. However, if the asset proposed to be sold is any other asset other than residential house, to claim the benefit of long term capital gain will be subject to fulfillment of various conditions laid down in the Income- Tax Act.